There are great expectations for the development of technologies that emit low amounts of greenhouse gases (GHG).
There are great expectations for the development of technologies that emit low (or no) amounts of greenhouse gases (GHG). While appropriate innovation policies are required in order to incubate such advancement, innovation is not a singular process but rather a mixture of different practices — including fundamental research and development (R&D), commercial R&D and commercial applications.
That last step is the most challenging; often a technology fails to take off because, as it leaves the laboratory and is poised to enter the market, it cannot be priced low enough to access a level playing-field with existing technologies. To avoid this “Valley of Death”, which refers to the gap between lab and marketplace, policy innovation that assists technology diffusion into the market is key.
Many GHG-mitigating technologies are in the category of “waiting-list technologies” and require new pricing mechanisms and market systems that incorporate externalities. As Japan has scarce local fossil fuel reserves, renewable energy has been on the Japanese government′s energy policy agenda for decades. Particularly after the oil crisis, the government allocated a significant amount of its budget to renewable energy R&D, yet surprisingly little attention has been paid to deployment.
Against this background, in 2003, the Japanese government enacted legislation based on a Renewable Portfolio Standard (RPS) scheme that requires electricity retailers to supply a certain amount of renewable electricity to grid consumers. Certified renewable energy generators earn certificates for the renewables they produce, and sell these (along with electricity) to supply companies. The latter then use the certificates to demonstrate their compliance to the regulatory body.